Indonesia former trade official jailed for corrupt deals ahead of palm oil export ban crisis

05 Jan 2023 --- The corruption court at the central Jakarta District Court has sentenced a former Director General of the Ministry of Trade and head of the country's Commodity Futures Trading Supervisory Agency to three years jail and a 100 million rupiah fine (US$6.410) in a case connected to improper palm oil export permits.

Indrasari Wisnu Wardhana, who served at the ministry for almost 33 years, has been found guilty of abuse of power and causing state economic losses. 

Four other former state officials were also found guilty of “corruption crimes” and sentenced to one to one and half years of jail time.

Indonesian authorities opened a corruption case last April, for corruption associated with the issuance of export permits, that same month the government was forced to implement a palm oil export ban due to the temporary scarcity of the commodity. 

According to the Attorney General’s office, the public prosecutor has made an appeal because it finds the decision too lenient in the light of the “losses suffered by the community, namely the state’s economy and including state losses.”

Palm oil export ban
Indonesian authorities implemented a short-lived palm oil export ban as the country suffered from a short squeeze of the edible oil and tried to ease the nation’s domestic prices. 

Wisnu Wardhana was investigated for the provision of export facilities of crude palm oil and its derivatives from January 2021 to March 2022. Vegetable oils reached a level of over 250 points in March, using the prices of 2014-2016 as a 100 baseline, according to FAO. Edible oil prices skyrocketed more intensely than any other commodity analyzed by the UN organization; cereal prices, which were heavily affected by the Ukraine war as well, never escalated over 173.5 points. 

Wisnu Wardhana was investigated for the provision of export facilities of crude palm oil and its derivatives from January 2021 to March 2022. 

Edible oils current situation
Indonesia removed the palm oil export ban less than a full month after it shocked global markets.

As other countries, such as Malaysia, took advantage of the export ban to increase their trading efforts, prices for palm oil deflated swiftly.

After Indonesian palm oil returned to markets, prices for the commodity collapsed. FAO’s vegetable oil index is at March 2021 levels, with the commodity dropping almost 40% in price.

This has prompted Indonesia to increase its biofuel mix to 35% to try to burn as much palm oil as possible as the country’s reserves are too high and higher prices will benefit the country’s exports.

By Marc Cervera